CAS cuts and VAT on various foods, main topics discussed with IMF mission

The tentative cut in social security contributions (CAS) as of July 1, improving corporate governance with state-owned companies and the medium-term implementation of a reduced VAT rate on vegetables, fruit, organic products and meat – after the scheme already applied on bakery products – are the main topics of discussions between the Government and the visiting representatives of the International Monetary Fund, Cristian Socol, advisor to the Prime Minister, on Tuesday told AGERPRES.

According to the advisor, the PM had a fist meeting with the IMF on Monday. The Government’s priority is to obtain permission to reduce social security contributions.

“We want to reduce it on one hand because this is an incentive for easing the fiscal burden, an incentive for employers to set up more jobs, and on the other hand it has been proven that when the CAS was cut by over two percentage points in the past, there has been a rise in voluntary compliance. (…) The negotiations will be difficult. This time we want to change the paradigm a little, namely look at a measure’s multiplier effects in the economy ,” said Socol.

The deficit caused by reducing CAS will be compensated with the tax on special structures (the so-called ‘pole tax’) but also from improved collections to the state budget, where, so far “there is no reason for undue optimism.”

“The multiplier effects of the CAS reduction will offset in time the reduction in revenues caused by the lower tax,” said Cristian Socol.

On Tuesday, the International Monetary Fund (IMF) mission met with the joint parliamentary committees on budget-finance of the Deputies Chamber and the Senate.

Ponta: CAS reduction won’t lead to new taxes being introduced